Success factors of very small businesses in regulated context: Case of Moroccan insurance brokers

Abstract

The development of small businesses and their success are part of many debates, both in academic and professional circles, with the aim of understanding the specificities of these businesses on which emerging economies depend. Variables acting on the success of these business types have been widely demonstrated through various previous research with a lack of intention for businesses in regulated sectors mainly characterized by the access factor, and the additional regulation. This observation may call into question the various results on the key factors of business success, evidently widespread in the entrepreneurial literature and consequently, leaves the question open on the validity of these success factors when we are dealing with small businesses in a regulated context.  Starting from this problem, this paper tries to verify, through a sample of 318 very small enterprises (VSEs) active in the field of insurance intermediation in Morocco, whether the key success factors remain the same for regulated VSEs and if the specific regulations can affect positively the success of these small companies. The choice of the insurance intermediation sector finds its motivation in the importance of this highly regulated sector in the Moroccan financial sphere and also the specificities of this sector organized around companies of different sizes (mainly VSEs) who are in charge of the distribution of insurance and reinsurance products, designed initially by insurance companies and controlled by a governmental regulator. The data was collected true survey containing all variables considered to be explanatory of entrepreneurial success according to the literature. The target choice was made randomly, based on the list published by the regulator comprising all the approved insurance intermediation companies. The results of this research show that the variables considered to be explanatory of the entrepreneurial success of VSEs are not all valid for companies active in a regulated sector such as insurance. Indeed, the regulatory surplus standardizes the business model governing this profession and consequently allows, reaching an acceptable level of success with coverage of the various risks that could put the business in difficulty. As a result, we can admit that the equation of entrepreneurial success for small businesses change radically for an activity when it is framed by specific regulation and a supervisor in charge of its control.

Classification JEL: M10

Paper type: Empirical research